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Discussion in 'American Airlines | AAdvantage' started by ukinny, Aug 13, 2013.
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fyi (source: Bloomberg)
Just got an alert from politico that says that some states are also taking action against the merger.
US gov't seeks to block AMR-US Air Merger
American Airlines’ merger with US Airways Group Inc. should be blocked, the U.S. Justice Department said in a lawsuit filed in Washington, upending American’s plans to exit bankruptcy through a deal that would create the world’s biggest airline.
The department, in a lawsuit filed in federal court in Washington, said the proposed tie-up violates U.S. antitrust law and would lead to less competition in the industry and higher prices for consumers. US Airways fell as much as 11 percent.
The Justice Department sued to block the transaction because it would remove the incentive for US Airways to offer lower prices and lead to higher airfares for consumers, said a person familiar with the matter who asked not to be identified because the matter is private.
The suit, unexpected by analysts and industry executives, marks a sharp break with the department’s past policy, which allowed six unprofitable airlines to merge over the past five years in an effort to cut costs and end losses. For American parent AMR Corp., which filed for bankruptcy protection in November 2011, the merger would have completed its reorganization and allowed it to exit court protection.
Have to imagine a good part of the focal point (de facto and not de jure) is the slots at DCA.
Basically the DOJ is complaining there will be 4 major airlines controlling 80% of domestic traffic and US Airways and American were just the last to the merger party hence the anti-trust suit.
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So if the merger is blocked, would US still be allowed to join OneWorld? Interesting.
The Justice Department should stop wasting its time on activities like this and spend its time pursing "justice" by going after states that are passing restrictive voting laws and attacking women's rights to their reproductive freedom of choice!
They (DOJ and the states who joined) will ask for concessions and it'll likely still go through. I'm not too confident US and AA will drop this and go back to their previously scheduled activities.
And posters should try and stay on topic. Plenty of other message boards for social commentary. This is a travel/freq flyer site.
"US Files antitrust lawsuit against US"
Yes, political commentary belongs in the off-topic forum. Let's keep this AA (or at a minimum travel) related. Please and thank you!
Too late for that! Granted I never liked the merger, but they might as well let the last two majors merge. Especially since their markets don't overlap much anywho.
This is going to be an interesting question to get answered. I think this is now more a matter of "When" than "If." Originally, US was scheduled to join oneworld by Q3 2013, right? Now I have to suspect that this will possibly be delayed...
I agree with you on one side, that they should be going after the voter ID laws, but this issue is also very important. If you live in Hawaii, Arizona, Texas and a few other key markets, this merger will definitely mean higher fares and less competition.
Quoting the Bloomberg article:
“We’re in court today because we think a full-stop injunction is the right outcome for consumers,” said Assistant U.S. Attorney General Bill Baer, head of the Justice Department’s antitrust division, at a press conference today in Washington. He said the government had talks with the airlines before filing the lawsuit, adding that the proposed merger was “pretty messed up.”
Doesn't sound like the DOJ has much flexibility.
Yes, because the government would never overstate its desired outcome when going into a situation like this in order to disguise their actual goal.
A good part, yes, but probably not the only part. I can't imagine DOJ would've filed a lawsuit if DCA slots were their only objection.
I hope DOJ is successful in blocking this, but it wouldn't shock me if it went through eventually.
.pdf version of the complaint - http://online.wsj.com/public/resources/documents/airlinescomplaint0813.pdf
Agreed. Hopes are high, expectations are low.
More uncertainty = higher chance of DEQM promo's (don't hold your breath, just sayin .. )
For better or worse, US DOJ does have considerable clout in such matters. OTOH, overstating one's position is a common tactic and they may well be satisfied with a few more concessions from AA and US. Interesting times ahead.
I think the number of markets impacted by this merger is grossly underestimated. For many flyers living in non-hub, non-focus markets where a connection is required to fly most places, competition will be significantly reduced and fares will go up.
Anyone out there (FFers) in support of this merger? It seems like there is very little support from the flying public. I'm curious to know the POV in support of this merger (from a FFer's perspective).
This seems to be the argument being made in a study by a passenger consumer group that advocates the lawsuit.
I agree that the focus on nonstop service between city pairs isn't a good metric, but sometimes a merger of two smaller competitors can more effectively compete with existing large firms.